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New set of guidelines focus on carbon impact of product transport
One major obstacle to more widespread carbon awareness in the corporate world has been a lack of standardized methods for measuring carbon emissions. Now, an industry group and
a consultancy firm are trying to change that.
An effort by The World Economic Forum's Logistics & Transport Industry Group with help from consultancy Accenture has come up with so-called standard guidelines for calculating consignment level carbon emissions from logistics and shipping operations.
Entitled the "Consignment-Level Carbon Reporting Guidelines," their objective is to help the transportation and logistics industries inform consumers and businesses about the carbon impact of product transport, and the guidelines were endorsed by the Governors of the World Economic Forum's Logistics & Transport Industry Group at its recently-held meeting in Davos, Switzerland.
These guidelines include principles for defining the scope of emissions to report and how these emissions should be allocated for things like shared transport or backhaul, according to the World Economic Forum and Accenture. They added that these guidelines will also complement broader upcoming and existing product-level carbon reporting standards, including the GHG (greenhouse gas) Protocol Life Cycle and Scope 3 Standards, which they said should be released by the end of this year.
In an interview with Logistics Management, Jonathan Wright, senior executive in Accenture's Supply Chain Practice, said that there were a number of factors that influenced the introduction of these guidelines.
Wright explained that as confidence begins to return to the freight sector, with weak signals of an upturn, or at least stability, conversations among industry executives shift from survival to growth. But in a highly commoditized and convergent market, new growth opportunities require the development of different business models by the sector's firms-from tackling the challenges presented by emerging markets-to embracing renewed demands from customers for granular reporting on sustainability.
"To help address uncertainty around carbon and sustainability in particular, Accenture has been collaborating with the World Economic Forum's Logistics and Transport group for the past couple of years," said Wright. "A year ago, Accenture jointly published the Supply Chain Decarbonization report...[which] outlined the main ways in which the transport sector-both unilaterally and working with the wider supply chain-can begin to take practical, near-term steps to cut its carbon footprint."
In 2009 between the Davos meeting and this year's meeting, Wright said Accenture has seen the demand for product-level carbon footprinting information take off, with many leading global retailers and manufacturers launching their own labeling efforts, which has led to a significant uptick in the number and detail of requests made of freight firms, where accurate product-level carbon footprint data is currently hard to calculate on a systematic and standardized basis.
These guidelines, Wright said, are a set of practical guidelines that the transport industry can use to respond to the increasing numbers of requests from its customers for product-level carbon footprint data.
"The guidelines come at a time when consumer interest in the carbon footprints of the products they buy is growing," said Wright. "For example, a recent Accenture survey found that 90 percent of consumers would be willing to switch to a new product if it was certified as minimizing its impact on climate change, our research shows that transport and logistics operations typically make up 5-15 percent of the carbon footprint of a product's carbon emissions. The remainder of the footprint is elsewhere in the value chain-in raw materials extraction, manufacturing, selling or disposal phases. These guidelines represent a first step towards creating a standard approach for measuring the transportation portion of a product's carbon footprint, which shippers can use as an input to reporting the total carbon emissions associated with the products they sell."
A leading expert on green logistics and supply chains said that these guidelines are very promising in that standardizing guidelines for calculating consignment-level carbon emissions from logistics and shipping operations reaffirms the impact that logistics drivers (facilities, inventory, and transportation) will have on the bottom lines of companies as the Green movement continues to grow.
"Simply trying to compete on price or through innovation is being severely tested by the increasing focus on reducing the carbon footprint of the products companies manufacture and that consumers purchase," said Brittain Ladd, a supply chain consultant and lecturer on green supply chain strategies for a consulting firm. "As we move towards a point and time when most products will have a carbon footprint rating, imagine how even more important supply chain management will become in ensuring competitive advantage in terms of minimizing the carbon rating of products. If consumers are willing to choose one brand over another because of small differences in price, why wouldn't consumers choose one brand over the other due to small differences in carbon rankings?" Ladd also noted that achieving low carbon rating on products is directly related to how well companies manage their supply chain and logistics drivers.
In order for these guidelines to come to fruition, Accenture's Wright said that in order to implement these guidelines logistics and transportation providers will have to invest in process, reporting and IT, which will take some time.
"We recommend the industry take two key next steps: conduct pilot operations on various transport modes and logistics facilities to establish consignment-level reporting at an operational level and assess implementation difficulties; and adopt automated reporting systems and software to increase efficiency and accuracy in reporting and enable automated information transfer to suppliers, shippers, contractors or customers," commented Wright.
Wright also explained that if done successfully, there is often a win-win on cost and carbon for shippers, and both the bottom line and the organization's emissions can benefit from an increased focus on energy usage.
"Quite simply, looking along the supply chain at carbon brings a different perspective that can yield new and previously unseen savings," he said. "One example is PepsiCo's Walkers Crisps, which switched to 100 percent British potatoes to lower food miles and used biodiesel containing 5 percent used cooking oil for their delivery trucks. There are other reasons to pursue carbon emissions reporting and reduction--it can often contribute to improved employee engagement and enhanced customer service, and perhaps most importantly is what many customers want."
Source: Supply Chain Management Review, 2/23/2010
Obama eyes biofuels, clean coal in new climate push
President Barack Obama laid out new steps to nudge the United States toward
energy independence, backing measures to boost production of biofuels and bury pollution from coal.
Using the new initiatives to garner support for a climate and energy bill stalled in the U.S. Senate, Obama met with a handful of state governors to press his policies to fight global warming and wean the nation from imported fossil fuels.
"America can win the race to build a clean energy economy, but we're going to have to overcome the weight of our own politics," he said at the meeting, noting China was pushing aggressively to lead in "clean" energy technology.
"We have to focus not so much on those narrow areas where we disagree, but on the broad areas where we agree," he said.
Agreement on a climate bill is still far from certain, and the legislation faces further obstacles after the election last month in Massachusetts that gave Republicans a Senate seat long held by Democrats, depriving the president's party of 60 votes that could overcome procedural hurdles.
Obama has acknowledged that a controversial "cap and trade" system could be separated from other parts of the bill, though he is adamant that a market-based mechanism be put in place to make high polluting fuels more expensive for industry than less-polluting, renewable energy sources.
Biofuels represent one renewable energy source the administration wants to promote, and a new interagency report spelled out ways the country would achieve that going forward.
"By 2022, we will more than double the amount of biofuels we produce to 36 billion gallons, which will decrease our dependence on foreign oil by hundreds of millions of barrels per year," Obama said.
He also announced a new task force to forge a plan for rolling out affordable carbon capture and storage technology in 10 years, including having 10 commercial demonstration projects up and running by 2016.
Carbon capture and storage is meant to capture the emissions from carbon-polluting coal plants and bury them underground rather than spewing them into the atmosphere but the technology is still being researched.
The Environmental Protection Agency said ethanol and other renewable fuels must account for 8.25 percent of gasoline sales in 2010 to meet Congress' mandate that nearly 13 billion gallons of renewable fuels be produced this year.
That is lower than last year's 10.21 percent renewable fuel standard that the EPA announced in November 2008.
The United States is far away from its goal of producing 36 billion gallons (136 billion liters) of biofuels a year by 2022, currently producing 12 billion gallons annually, mostly from corn ethanol.
The report offers solutions that would ease the way for ethanol to get from producers in the U.S. Midwest to consumers near the coasts. Such snags include filling stations that have been slow to adopt pumps to distribute a fuel blend that is mostly ethanol, called E85, and a lack of dedicated pipelines for biofuels.
Loan guarantees for ethanol plants could be targeted more effectively to support new biofuels plants, the report said.
The struggling biofuels industry is concerned the Obama administration will move too quickly away from ethanol to biofuels that derive from more difficult techniques using wood chips and other biomass.
The president's backing of ethanol, however, could shore up his support in farm states, where ethanol boosts demand for corn.
Environmentalists and some scientists say production of U.S. biofuels from corn and other grains can drive out production of other crops, prompting farmers in other countries to burn down forests and clear land to grow those crops -- creating new sources of CO2, the main greenhouse gas blamed for global warming.
Source: Reuters, Feb 3, 2010
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